Water scarcity and pressures associated with climate change pose major challenges to water resources management in Iran’s arid and semi-arid basins. The Hable-Rud Basin in the Garmsar region of Semnan Province requires a reassessment of water allocation and reservoir operation strategies in response to declining inflows and increasing pressure on water resources. This study aims to optimize the operation of Namroud Dam and reallocate water resources while jointly considering distributional equity, economic efficiency, and environmental sustainability. An integrated MODSIM–PSO framework was developed, using MODSIM to simulate the water resources network and water allocation, and particle swarm optimization (PSO) to determine optimal reservoir release patterns. The three performance criteria were evaluated over a 120-month simulation period. Scenarios involving 20%, 40%, and 50% reductions in inflow relative to baseline conditions were considered to assess the effects of declining water availability. The results showed that optimization improved system performance across all scenarios. Under baseline conditions, distributional equity, economic efficiency, and environmental sustainability improved by 14%, 11%, and 1%, respectively. Under the 20% inflow reduction scenario, equity and efficiency each improved by 9%, while sustainability increased by 1%. The corresponding improvements were 7%, 8%, and 1% under the 40% reduction scenario, and 3%, 6%, and approximately 0% under the 50% reduction scenario. These findings indicate that although declining inflows constrain the scope for improvement, the proposed framework can enhance system performance even under severe water scarcity, supporting more resilient water resources management.